Good morning, and welcome to Horizon Technology Finance Second Quarter 2013 Conference Call. Today’s call is being recorded. All lines have been placed on mute. We will conduct a question-and-answer session after opening remarks, instructions will follow at that time. I would now like to turn the call over to Michael Cimini of The IGB Group for introductions and the reading of the Safe Harbor statement. Please go ahead, sir.

Thank you, and welcome to the Horizon Technology Finance second quarter 2013 conference call. Representing the company today are Rob Pomeroy, Chairman and Chief Executive Officer; Jerry Michaud, President; and Chris Mathieu, Chief Financial Officer. Before we begin, I would like to point out that the Q2 press release is available on the company’s website at www.horizontechnologyfinancecorp.com. Now, I’ll read the following Safe Harbor statement. During this conference call, Horizon Technology Finance will make certain forward-looking statements including statements with regard to the future performance of the company. Words such as believes, expects, anticipates, intends, or similar expressions are used to identify forward-looking statements. These statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements, and some of these factors are detailed in the risk factor discussion in the company’s filings with the Securities and Exchange Commission, including the company’s Form 10-K for the year ended December 31, 2012. The company undertakes no obligations to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. At this time, I would like to turn the call over to Rob Pomeroy. Rob?

Good morning, and thank you all for joining us. We are pleased to report two important accomplishments during the second quarter. First, that we earned net investment income of $0.38 per share, and earned a portfolio yield of 14.5%. Our second quarter NII more than covered our dividends of $0.345 per share paid in the second quarter, and we maintained a portfolio of quality, high yielding assets, delivering solid financial results for shareholders. Second, we also strategically enhanced Horizon's future earnings potential. Specifically, in May we reduced the interest rate on our revolving credit facility, and in June we issued $90 million of asset-backed notes at a fixed interest rate of 3%. At June 30, we have over 90% of our borrowings locked in with a fixed interest rate. Today I would like to speak to the Horizon venture lending strategy, the earnings power of our high-quality portfolio, and the value proposition of owning shares in Horizon. Horizon is a leading provider of secured loans to venture capital backed, development stage companies. We target four broad technology markets, including information technology, life science, healthcare information and services, and clean-tech. Venture lending is a smart way to play in the technology and venture capital market. Our investments are secured loans with strong current pay yields, and we receive warrants on our transactions. These warrants allow us to participate in the upside when these young companies succeed. Conversely the secured nature of our loans, which are made at low loan-to-value protect us if the borrower runs into difficulties. As a result, the Horizon track record is characterized by low loan losses and warrant gains that exceed these losses over time. The capital that Horizon provides to these technology companies is used to further clinical research, launch new products, ramp revenue, and reach…

Thank you Rob, and good morning everyone. Our marketing activity in the second quarter reflects management’s disciplined approach to meeting the strong demand for Horizon’s value-added products by selectively investing in only those transactions that meet our time-tested, underwriting and return criteria and offer the potential for upside returns from warrants gains. In highlighting our performance for the quarter, we funded 10 companies, totaling $29 million. We added seven new companies to our portfolio, which increased the total number of companies in which we owe warrants to 72, an increase of 31% as compared to June of 2012. Importantly, the seven new company transactions we funded in Q2, which represents $24 million of the $29 million had an average onboarding yield of 12.4%. As a reminder, onboarding yields for our venture loan transaction consists of the coupon rate, commitment fees, and end of term payments, but does not include expected gains from warrants, prepayment fees or acceleration income from end of term payments, all of which historically have also been a part of our overall venture debt portfolio returns. We increased the amount of our investment positions in three of our existing portfolio companies. In the second quarter, we closed seven new loan commitments totaling $33.5 million compared to five new loan commitments totaling $25.5 million in Q1. Our approved and committed backlog increased from $15.6 million to 10 companies at the end of Q1 to $19 million to 10 companies at the end of Q2. Although there can be no assurance that transactions in our pipeline will be funded, our pipeline remained robust in the second quarter with more than $100 million of new opportunities, enabling Horizon to continue to select the highest quality investments available in the market. Subsequent to our investment portfolio update press release issued on…

Thanks Jerry, and good morning everybody. Our consolidated financial results for the three months ended June 30, 2013 have been presented in our earnings release distributed after the market closed yesterday. We also filed our Form 10-Q with the SEC last night. For the three months ended June 30, total investment income increased 60% to a record $8.8 million compared to $5.5 million for the second quarter of 2012. This increase was primarily due to the increased average size of our loan portfolio, while we maintained onboarding yields on our new transactions. Total investment income for the quarter included $8.4 million from interest income on investments, as well as approximately $400,000 of fee income associated with loan prepayments totaling $19.3 million from four of our portfolio companies. Loan prepayments serve to enhance Horizon’s overall returns to shareholders. For the six months ended June 30, total investment income increased 33% to $16.2 million compared to $12.1 million for the first six months of 2012. Total investment income in the first six months of 2013 consisted of $15.8 million in interest income on investments, with the remainder consisting of fee income due to the loan prepayments in the second quarter. For the second quarter, our portfolio yield was 14.5% compared to 12.9% for the second quarter of 2012. The portfolio yield for the six months ended June 30, 2013 and 2012 was 13.7% and 14.1% respectively. Onboarding yields have remained consistent with those of the existing portfolio. The primary changes from quarter-to-quarter to portfolio yields are driven by the timing of new loan fundings and timing and extent of loan prepayments within the portfolio. The company’s total expenses were $5.1 million for the second quarter as compared to $3.2 million for the second quarter of 2012. Total expenses for each period consisted…

Thank you, Chris. Again we are pleased by our performance for the second quarter and first half of 2013 as we continue to execute according to plan. With our high quality assets with yields between 11% and 14% combined with the opportunity to benefit from additional upside through our expanding warrant portfolio, we remain well positioned to generate compelling risk-adjusted returns and drive long-term value for our shareholders. Before we open the floor for questions I would like to note that we plan to hold our next conference call to report third-quarter results during the week of November 4, 2013. We will be happy to take questions you may have at this time.

Thank you. (Operator instructions) The first question is from Greg Mason of KBW. Your line is open.

Great. Good morning gentlemen. You mentioned your new investments have a 12.4% total yield, could you talk about what trends you are seeing in the yield environment for the venture capital markets relative to, you know, a couple of quarters ago, as well as the pipeline that you are looking at today going forward?

Yes, sure. This is Jerry. We are actually, you know, I can even go back further than that but over a quite a period of time now, we have actually seen pretty stable rates as it relates to competitive pressures on rates. I think we have been pretty consistently seeing deals from in the kind of 11.5% to 13%, and again you have to remember we do both second lien and first lien deals. So, probably get a little bit higher yields on our second lien deals than our first lien deals, but very consistent along that path. We are really still looking for value, and I think that that is going to continue now, especially with the more active M&A and IPO market, where companies can actually kind of see the future or at least predict some of the future relative to the potential for an exit. And so really what we are looking for now is the value proposition in the loan to get them to that exit. So the difference between, unlike other markets where, you know, every point of interest rate matters, in our markets what they are really looking for is, you know, how much more value can we help them create before that exit. So they are not really particularly care out 25 basis points of rate. They are more interested in the overall value of the loan. We’re still seeing that and I think we are seeing it even a little bit more today because there seems to be a little bit more optimism especially in the VC community relative to exits. They have had some especially in the second quarter, some of the biotech IPOs have really been better than what we have seen in a long time. Not just that they were able to get out but they were able to get out within the price range in many cases, and also some of those deals were upsized. So as that capital started to come back now, the VCs, you know, they are looking at their other later stage portfolio companies and potential exits, plus they have more money to invest. So we’re still seeing pretty stable rates. I’m not going to say it is not a competitive environment, it is a competitive environment but I still think that brand name in this market matters greatly, and, you know, investors look to those lenders that have historically been able to provide good products with good value, and people that they know that they can work with as these companies, you know, manage their way through their growth curve. So I still like the kind of returns we are seeing in the marketplace today, the supply of opportunity is still -- the demand for loans is still very good and the spreads are still very attractive and I expect to see that through the rest of the year.

I appreciate those comments, and then you talked about competition I will be curious to see what you are seeing in terms of new entrants and how they are behaving, I know yesterday we saw (inaudible) starting up a venture capital lending, Aries has entered this space, I’m sure there are some private players as well, so what are you seeing from a competitive front there, as well as could you also talk about the competitive actions of the technology banks like Silicon Valley bank and Comerica?

Sure. So, I mean, you know, new entrants into the market is nothing new for us. I think the reason we’re probably seeing that is, you know. we do get attractive yields in our marketplace. I think our market has expanded relative to the amount of demand given the longer time for exits, you know, all kinds of financing opportunities are now being considered for the private companies, where before they had I think a predictable exit in the late 90s. And it is becoming a more mature market, so it is a very attractive market from the outside looking in. What we have historically found though for new entrants, especially those that are not solely focused as a venture lending strategy is that it is really -- it is one thing to look from the outside and come in, it is another thing to actually get in this market and understand how to work with these companies over the long term to create value for their investors. And, you know, I would also say that that one of the benefits that you have in doing this is that as we work with these companies, we are actually after when you get past onboard yields and things like that during the course of the loan we actually have opportunities in these companies to add more value for our shareholders as they work through their development stage and ask us to help them further. So, you know, we just really like the space, but we also know how difficult a space it is to work in and the knowledge-base that you need and the experience that you need, not just from, you know, the marketing people, we have I think the best in the business, but also from our portfolio managers and things like that. You know, building that kind of infrastructure takes a long time and getting the confidence of the market place takes even longer. So we are -- we always watch what is going on relative to the competitive standpoint, but we’re real comfortable where we are today from that standpoint. You know, as it relates to the banks, you know they are still regulated and they still have their niche where they play. We still, you know, work pretty closely with many of them relative to being able to find finance the growth stretch capital part of what the market needs versus the more asset-based side of the business and so, you know, we still feel pretty comfortable about where their niche is and where ours is, and we work pretty collaboratively with them.

Great. I appreciate the comment.

Thank you, and the next question is from Robert Dodd of Raymond James. Your line is open.

Hi guys, a couple of quick questions, on the securitization, about 2.1 million increase upfront to the structure, what is the amortization to it?

We basically will take the amortization relatively over the term of the financing.

And then on kind of the indications you gave flat to down 10 in portfolio, can you give us any more color on, because you talked about one prepayment already made, maybe another one, are really expecting refinancing activity in the quarter, particularly if some of these new guys come in and maybe get aggressive on pricing essentially, or is the -- or you are expecting a relatively low amount of those funding in the third quarter, typically pretty slow?

It is more of the latter Robert.

Okay, got it. Then, just finally, capital plans, I mean you have 93% debt-to-equity asset coverage ratio where it is, that is high, and well above your target range, and I know obviously you can’t say much about it, but can you give us any color on whether you have changed that target range for debt-to-equity to the company, or broad color on what your plans are in that area?

So, we -- I think Chris addressed this in the body of his part of the presentation. I mean it is high Robert, especially was on the last day of the year, or quarter given that is the day we did the securitization. The portfolio does amortize really rapidly, and so as you look forward the actual asset coverage ratio improves the debt when it comes down just from normal amortization. So, we haven’t really changed our target. We believe 0.8 (ph) is the right place to operate, but you know, even absent a capital raise we will work down from where we are today to a slightly more comfortable level.

Got it. Thanks.

Thank you. The next question is from Casey Alexander of Gilford Securities. Your line is open. Casey Alexander – Gilford Securities: I was just wondering, there was a lot of churn in the portfolio, so what is the portfolio ending balance of first lien versus second lien?

I don’t think we have that exact number in my fingertips Casey, but I don’t think it is actually changed very much.

Yes, I can tell you for the first half of the year, we did more first lien deals than second lien deals in dollars, about the same actually in the number of transactions in dollars, but it is not significant. So the portfolio didn’t -- the make-up of the portfolio wouldn’t have changed much in that regard. Casey Alexander – Gilford Securities: Okay, I think as of the last reading it was 55 first lien, 45 second lien, so you would say it is pretty close to that?

I’m using your numbers, so I would say that --

We don’t have a firm number, but I find that reasonable as a general guideline. Casey Alexander – Gilford Securities: When you quote the average yield on the portfolio on a quarter-by-quarter basis, it is awfully variable as a result of portfolio activity, what is sort of the -- you know, the average yield just on loans so that we know how to, you know, sort of accrue net income or investment income?

So, I guess the best way to look at that Casey would be look at the quarters in which we have no prepayments. It was 12.9 I think in the first quarter this year, or I think it was the quarter last year, where we had no prepayments. So those are pretty pure numbers. Casey Alexander – Gilford Securities: And since you say that the sort of deal yields are staying pretty consistent, that number is okay or is it trending in any one direction or another?

It is not moving materially. Casey Alexander – Gilford Securities: Okay, great. Thank you.

Thank you. The next question is from (inaudible) from Wells Fargo Security. Your line is open.

Good morning and thank you for taking my questions. With your recent securitization and the cost of debt on this, I was wondering if there was any potential for reducing your unused facility fee on the Fortress facility, or even call of this facility, and if you can remind us is there a call period on this facility?

Okay. That is a fair question, the Fortress facility has non-use fee of 1% of the amount not used. It does have a prepayment provision that we can prepay, but there is a penalty for it, so right now it is not advantageous to prepay that. It is available to us. We are looking at all our options as far as lowering the non-use cost of our facilities as well as the ongoing actual coupons and such, but nothing to report today regarding the Fortress facility. It remains in place. We continue to have full access to it. Regarding the securitization, I think Robert asked a question on the amortization of cost. We think of the all in cost of that facility right around 4.5%, although the coupon is about 3%, or is 3% with the debt issue costs, we are looking at that as being more effective cost of 4.5%.

Thanks for that color, and if you could talk about the repayments that are expected in 3Q, kind of a ballpark, what the accelerated OID (ph) would be and exit fees just for modeling?

Yes, we have not -- we are not prepared to…

Quantify.

Quantify that from a level of detail both on the loan side just because the uncertainty of the amounts and then also the GAAP accounting part of it.

All right. Thanks for taking my questions.

Thank you. (Operator instructions) The next question is from Greg Mason of KBW. Your line is open.

Great thanks, one last follow-up question on the new securitization, what is the expected life for that securitization based on what you think the repayments will be, and remind me there is no reinvestment period, correct?

.:

Great. Thank you.

The actual term is more like four years but the weighted average is about a year and a half.

Got it. Thank you.

You are welcome.

Thank you. There are no further questions in the queue at this time. I like to turn the call back over for closing remarks.

Thank you, operator. I would like to thank everyone again for joining us on today’s call and for following the Horizon story. We look forward to sharing our progress with you in the future. Operator?

This concludes Horizon Technology Finance Corporation’s conference call. Thank you and have a great day.